Starting on a positive note, 88 Energy (88E) announced an operations update. The ice road is more than 80% complete, the drill permit has been issued and spud is anticipated later this month. I highlighted 88E as a favourite several times towards the end of last year around the 0.7p placing price and it's been as high as 1.48p since then. This is a big drill: the gross mean prospective resource across the seven stacked targets to be intersected by Charlie-1 is 1.6 billion barrels of oil, 480 million barrels net to 88E.
Another one with a potential major drill, Bahamas Petroleum Company (BPC) started the week announcing a Bahamian mutual fund update. An administrative extension of the initial subscription period of 3 days has been implemented which will now end at 17:00 Eastern Standard Time today. We should know the outcome of this later in the week. It will be interesting to see how much they've been able to raise from the locals. A share price above 3p could well lure them in at 2p.
Tower Resources (TRP) announced a Cameroon operational update. The marine survey vessel completed its work at the well site last Friday and the company's initial view is that the data from the three boreholes are consistent and in line with pre-survey expectations. It all now comes down to whether or not they can negotiate a farm-out. If they do, it flies.
Rose Petroleum (ROSE) put out a couple of announcements. They're still talking about a farm-out of their Paradox acreage, but they've been doing that for years. In the meantime, they're looking to acquire another asset. They also updated on the McCoy lease working interest acquisition. That's one the new directors bought from themselves. They talk about "securing the necessary funding to enable the Company to participate in this transformational opportunity" but the reality is that this is just a 2.2% working interest in a shale oil well.
Petrel Resources (PET) issued an update regarding the Tamraz group shares. They didn't even try to explain it, but just posted a link to a letter from the group. The story sounds like pure nonsense and if you want to read it the link is on Petrel's RNS. I'm not surprised that the company made no comment on it. I'm still getting asked about this and as I explained last weekend, I mentioned Petrel as a favourite several times around 1p. I said it had the potential to 10 bag and it did a lot more than that, going up 25 times. Quite frankly, the whole PET story is now in la la land. It was interesting at 1p, but those who keep asking me about it and who bought it at 15p, 20p and 25p really should examine their investing style. Personally, I would never buy a share that’s up 100% or more, let alone 1,000% or 2,500%. You have to get in at, or close to, the ground floor with these things and overcome the fear of missing out. You need to control emotions and be patient. It’s all about getting the timing right.
Zenith Energy (ZEN) issued an announcement headlined "Successful Issue of Bonds & Operational Update." Perhaps slightly misleading to use the word "successful." The bonds are issued, but they are not actually subscribed for. They're talking about an April 2020 spud at Tilapia (where they're now in partnership with Anglo African Oil & Gas (AAOG)), but other than having some meetings, they don't appear to have made any actual progress in the Congo. Essentially, ZEN is a collection of failed assets and they're talking today about acquiring another one. The reality is that despite all the news and ramping over the past year, the share price is down 60%.
I mentioned Hurricane Energy (HUR) last weekend, saying that I had cautioned about it towards the end of last year when it was in the 30s and it was now down to 17p. The decline has continued this week and it was under 15p yesterday. Along with FOMO (fear of missing out) which I mentioned before, most money that’s lost in the market is by those who think they’re buying bargains. Most exposed to this are those who think they understand fundamental analysis, but don't. There’s always a reason why what appears to some to be a "bargain" may not in fact be mis-priced.
Fundamental analysis is not the most important thing with these small caps anyway, critical is to understand how the finance and promotion side works. That’s why I know what’s going on at these companies and where they’re likely to go. People ask how I know this stuff. It's simple, I’ve 40 years experience in the markets (both UK and US) from both sides of the fence. If you're interested in knowing more about me and my actual trading ideas, then go to https://www.oilnewslondon.com/oilman-jim
The author holds one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.